January 25, 2007

 

CBOT Corn Outlook on Thursday: Up 3-4 cents, e-CBOT, lack of follow through

 

 

Corn futures on the Chicago Board of Trade are seen starting Thursday's day session on firm footing, garnering strength from overnight trade amid the absence of follow through pressure from Wednesday's setback.

 

Analysts expect corn to open 3 to 4 cents higher.

 

In overnight electronic trading, March corn ended 4 3/4 cents higher at US$4.05 1/2 a bushel and May corn finished 3 1/2 cents higher at US$4.16.

 

Wednesday's declines were seen as a pause in an uptrend that will refresh market bulls, said a CBOT floor analyst. The bulls still have the benefit of the doubt, as prices still continue to find support beneath the market, he added.

 

A quiet news front is expected to keep technical factors in play, with the ability of the nearby March future to settle above the psychological US$4.00 per bushel level providing underlying support to the bullish cause. A supportive long range demand and supply outlook is expected to keep speculative buyers enthused, traders said.

 

Traders will keep a close eye on fund activity, but with crude oil and metals trading higher, with a lower the dollar in early trade, the funds may view as this as a buy signal, a CBOT floor analyst added.

 

A technical analyst said Wednesday's profit-taking setback caused no chart damage. The corn bulls are still in firm technical command, as a bull flag or bullish pennant pattern still could be forming on the daily bar chart, he said.

 

First resistance for March corn is seen at Wednesday's high of US$4.03 and then at US$4.05 - the top of Wednesday's downside price gap on the daily chart. First support is seen at Wednesday's low of US$3.97 1/2 and then at US$3.92.

 

The U.S. Department of Agriculture said net weekly export sales for corn were 992,900 metric tonnes, down 30% from the prior week and 8% under the prior 4-week average. Trade estimates called for commitments in the 800,000 to 1,000,000 tonne range. The biggest buyers were Japan, buying 513,700 tonnes, and Germany, buying 210,300 tonnes.

 

U.S. Midwest cash corn basis bids were mostly steady Thursday, cash traders said. Spot U.S. cash corn bids were up 2 cents in Cedar Rapids, Iowa, and down 2 cents in St. Louis.

 

Meanwhile, the DTN Meteorlogix weather forecast said showers and cooler weather for the short range favors developing crops in Argentina. Long-range charts are more uncertain as hot weather may return to southwest Argentine growing areas.

 

In other news, India Thursday completely removed the import duty on corn to keep a check on its prices and control inflation. Corn can now be imported without paying any import duty until Dec. 31, 2007, a government statement said.

 

China's annual corn processing capacity rose to 70 billion kilograms in 2006 from 50 billion kilograms a year earlier, a senior statistics official said Thursday. The volume of corn processed was nearly 35 billion kilograms last year, compared with more than 25 billion kilograms in 2005

 

In overseas markets, corn futures traded on China's Dalian Commodity Exchange settled lower, tracking similar losses in CBOT corn contracts. The benchmark September contract settled RMB5 lower at RMB1,708/tonne.